Late or missed payments can sneak up on the best of us. Life happens and it’s not as uncommon as you may think to discover a slip up has occurred. 

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Understanding how having late payments on credit reports can affect your credit score is crucial for maintaining a healthy financial resilience. 

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But does a late payment affect credit scores, how long do late payments stay on credit reports, and what about removing late payments from credit reports? Loqbox gets into it.

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Know the score

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Building up to (and then maintaining) a healthy credit score will help you to get the best deals when you borrow money. When it comes to mortgages, credit cards and loans, getting the best interest rates can save you £1,000s in the long run. And because your credit history plays a big part in the generation of your credit scores,  avoiding missed or late payments is really important. 

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You have three different credit scores, not one universal score that can guarantee your credit applications are accepted. And these are calculated by the top three credit reference agencies (CRAs) in the UK: Experian, Equifax, and TransUnion. 

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If you’re concerned that a  late payment may have already affected your credit scores, you can check them and your credit reports for free, as often as you’d like to, without hurting them, using these free services:

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ClearScore (uses Equifax data)*

Credit Club (uses Experian data)

Intuit Credit Karma (uses TransUnion data)

^{*For transparency, we wanted to let you know that ClearScore pay us a small commission if you sign up using this link.}

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What is a late payment?

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When you take out a credit agreement, you will usually organise a monthly repayment plan with the lender. These payments are part of the agreement you make to repay money that you borrow. 

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If you don’t meet these obligations in full and on time, it’s known as a missed or late payment. These will show up on your credit reports for six years and it can impact on whether you are able to get credit in the future.

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But what if life pulls the rug from underneath you one month, or some money crisis crashes your finances?

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The good news is that a payment isn’t considered ‘late’ if it is made within 30 days of the agreed date. However, all agreements with lenders differ and late payments made inside a 30 day window can still sometimes have an impact or incur fees and charges, so it’s important to check the details of any agreements that you’ve made with lenders first. 

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If you notice you’ve fallen behind with a payment — get in touch with the lender as soon as possible. Make the payment as soon as you can, before it makes its way to your credit file with Experian, Equifax or TransUnion, respectively. The lender may also be able to help you rearrange the payment date to a more suitable day of the month for you (like just after payday or whenever your source of income arrives in your bank account).

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Does a late payment affect credit scores?

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The short answer is yes, missed or late payments can make your credit scores drop. Your payment history is one of the key things that lenders consider when assessing whether or not to lend to you. So, if you have a credit history that shows you’ve been missing payments then lenders would likely see you as a ‘higher risk’ to lend money to.

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You might be wondering if even one late payment on your credit report can hurt it? Yes unfortunately, if you miss a payment with your lender, for instance your phone contract, you will need to have rectified the late payment before the supplier reports your data to the credit reference agencies that they work with.

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A single late payment can cause your credit score to drop, and it will stay on your credit report for six years. It’s true that single late payments are often considered to be minor infringements but they do get flagged and can make lenders consider you as being unreliable with credit.

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But if you miss a payment, you don’t necessarily have to panic. It’s not all bad news. If your late payment is a total one-off and you keep up with your regular payments moving forward, your credit score can absolutely recover. It’s just important to keep everything else in line and up to date, and focused on rebuilding evidence of making every payment since then.

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However, if you keep missing your payments, it could lead to a more serious issue like a ‘default’ or ‘County Court Judgment (CCJ)’ appearing on your credit file. Either way, missing your payments or making them late can always incur charges, penalty fees, and increases in interest rates.

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How long do late payments stay on credit reports?

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If a late payment becomes a missed payment and is reported to the credit reference agencies, it can stay on your credit report for six years. This means that even a single late payment can have a lasting impact on your creditworthiness. But remember the impact of the missed payment marker on your report lessens over time. So if it’s a one-off, and you make future payments on time, then you can recover and lenders will start to use evidence in your more recent financial behaviour in their decision-making.

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Removing late payments from credit reports

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Disputing late payments on your credit report, or trying to get them removed, can be challenging but it's not impossible. If there’s a good reason for your late payment, for example, if you have been made redundant or there was an unforeseeable medical issue, you can ask Experian, Equifax and TransUnion to add a ‘notice of correction’ on your report to explain what happened.

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If you believe a late payment has been reported in error, you can also dispute it with the lender and credit reference agencies. To do so you will need to provide any supporting documentation or evidence that proves the late payment was a mistake. The lender will then investigate your claim and if they agree they can ask the credit reference agency to remove the missed payment marker from your credit report altogether.

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Does a failed Direct Debit affect your credit rating?

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Yes, a failed Direct Debit can indirectly affect your credit rating if a payment isn’t made as a result of insufficient funds. If whatever is impacting your Direct Debit isn’t fixed, it could lead to a ‘late’ payment if not dealt with promptly. 

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Always make sure there’s enough money in your bank or building society account before a payment is due, and fix any problems that could affect your Direct Debits as quickly as possible.

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Do late mortgage payments affect credit scores?

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A late mortgage payment can significantly impact your credit score since your mortgage is likely to be one of the most substantial financial commitments you have. 

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Late payments on mortgages can affect your ability to get good interest rates and credit in the future. So it’s important to prioritise your mortgage payments to maintain a positive credit history — but also to support your financial wellbeing. 

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Dealing with the stress of falling behind with your mortgage payments (and the risk of losing your home) will be far worse if you don’t reach out to your lender to talk to them about your situation. They will have a specialist team to talk to, but if you’d like to, you can also speak to the debt charity StepChange who offer expert debt advice for free.

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Although not everyone can, if you do have a spare room in your property, there is also the option of getting a lodger in to earn some extra money to have savings for falling behind on your payments. You’re entitled to £7,500 in tax-free earnings from having a lodger under the ‘Rent a Room’ scheme  (as it stands in 2023-2024). That works out at £625 per month in rent, but there are conditions to this type of agreement and it’s best to read through the government’s helpsheet before deciding if it’s right for you.

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Does paying bills late affect credit?

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Your lender will likely have a grace period to make your late payment before they report to the credit reference agencies and cause an effect to your credit score, but that doesn’t mean you should be running the risk of relying on playing catch-up every month. 

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If you don’t keep on top of things, these will be reported to Experian, Equifax or TransUnion and trigger a drop in your credit score. It’s better to rearrange a better payment date with your lender, or brush up your budgeting and planning skills, instead.

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Missed or late credit card payments can affect credit scores, for example, as they directly relate to your management of credit — not to mention that you may be less likely to be offered credit limit increases (which also helps to build your credit score).

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How to avoid late payments on your credit report?

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OK, you get it. Late payments aren’t a good thing to have showing on your credit history. So what can you do to avoid them? Here are some tips and tricks to make sure that you don’t get missed or late payments on your credit report:

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Take a look at any credit you have set up

What are your agreed payment dates and amounts, and what grace periods do the lenders offer (if any)? Now set up Direct Debits and automate your monthly payments to come out on payday. Get your payment obligations sorted before you even have a chance to see the cash.

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An emergency fund 

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This is useful to cover any issues you have while paying back money you owe on short notice. If something unexpected hits one month, you can dip into your savings to avoid any fees and charges, and negative flags on your account. 

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Consider if you can afford it, first

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Be honest and realistic about your ability to stick to your repayment plan, and don’t apply for credit you can’t really afford to pay back. 

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My credit score has been affected by late payments. What can I do?

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If you have already been affected by late or missed payments and your credit score has dropped, it’s important to try and get your finances back on track as soon as possible. 

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Although there isn’t an overnight fix for missed or late payments appearing on your credit report, you can channel your focus on building a fresh history of positive credit use. Loqbox could be a good alternative to building your credit history with simple £2.50 a week membership payments. Activate all three of our clever credit-building tools for the best results.

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Improvements to your credit score are not guaranteed.